As it sees continued growth in digital sales, Wingstop Inc. is turning its ear toward voice-recognition technology to digitize phone orders, executives said Thursday.
Charlie Morrison, CEO of the Dallas-based fast-casual chicken wing chain, said Wingstop’s digital sales could eventually reach the levels enjoyed by some national pizza chains, which exceed 50 percent.
In the second quarter ended June 30, Wingstop’s digital channels produced 24.3 percent of total sales, he said.
“Revenue growth through our digital channel expansion is one of our key top-line drivers,” Morrison said in a call after releasing second-quarter earnings. “We continue to see roughly 400 basis points of organic growth year-over-year in our digital sales mix.”
Wingtop has tapped into orders via social-media channels and through services like Amazon’s Alexa, but a large percentage of the brand’s orders still come in over the phone, Morrison said.
“We are also working on natural voice-recognition technology for orders that come in through the phone so that they can be digitized and converted into online orders,” he told analysts.
About 75 percent of Wingstop’s sales are takeout and nearly three-quarters of the brand’s domestic restaurants generate more than 20 percent of sales through digital channels.
“We believe that we have ample incentive and opportunity for further digital expansion,” Morrison said.
The company is also continuing with its delivery strategy, which it tested first in April 2017 in Las Vegas and expanded later in the year to Austin, Texas, and Chicago.
“In all test markets, we have experienced sustained mid- to high-single-digit lifts,” Morrison said. “The lift in sales from delivery is highly incremental and profitable at the restaurant level. The profitability of delivery is bolstered by the check lift we have seen in these orders, which is slightly higher than the $5 check lift that we see on ordinary digital orders.”
The company has partnered with third-party provider DoorDash for its delivery rollout.
“We will follow a phased approach to this rollout over time,” Morrison said. “We are working closely with DoorDash to map our domestic footprint with theirs, prioritizing certain markets as we finalize the details of our national rollout plan.” The company will open a small delivery market next and then one or two larger markets before year’s end, he said.
For the second quarter, Wingstop’s profit rose 39.4 percent to $6.8 million, or 23 cents a share, from $4.9 million, or 17 cents a share, in the same period last year. Revenue increased 17.2 percent to $37 million from $31.6 million in the prior-year quarter.
Same-store domestic sales increased 4.3 percent in the quarter.
As of June 30, Wingstop had 1,188 restaurants system wide, with 1,066 in the United States.
During the quarter, the company had 31 net new openings, including 10 internationally. The company opened its first restaurant in Panama in June.
“Given that chicken is the most highly consumed protein worldwide and that we have the ability to augment our flavor offerings to match local taste preferences, we are seeing early success in our emerging international business,” Morrison said.
Wingstop’s next international markets will be the United Kingdom, France and Australia, with all three expected to see their first openings this fall.
“This is a year where we are investing heavily in our international business to build up the new markets,” Morrison said.
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